Sugar News
2022
The negative trend affecting sugar production continued during 2022 due to geopolitical, climatic and above all, energy related factors. Russia’s invasion of Ukraine, in fact, led to a sharp decrease in the natural gas and grains supplying Europe. As a result, sugar prices, which had already been pushed upwards after the post-Covid economic recovery, had a further and more significant surge coming from the considerable increase in refining costs concerned to gas prices. Moreover, farmers began demanding increasingly higher prices for beet cultivation in wake of increases in other competing crops, driving the price of sugar above the $900/ton threshold.
2021
In 2021, the prolonged months of drought in Brazil affected the cane yield of the world’s leading sugar producer significantly, thus bringing the world budget into a deficit. This caused a strong appreciation in the international sugar market and also in European’s one. A further boost in price came from the recovery in consumption following the end of the restrictions related to the pandemic. Moreover, for the third consecutive year, European production decreased due to adverse weather conditions together with the spread of the yellow virus in France. Given these factors and in order to satisfy the internal demand, the European sugar stocks were halved, taking the price to $600/ton.
2020
The European sugar sector was slowly recovering from its typical price levels, however, during the first quarter of 2020, the market suddently changed due to several factors all regarding the pandemic. First of all, there was a drastic reduction in consumptions, which triggered a strong and sudden drop in the raw materials’ prices. This caused the positive trend in the international sugar market to slow down.
Furthermore, the collapse of oil price also contributed to intensify the production of sugar over the production of ethanol globally. In Europe, the consumption decline coming from the governments’ restritions led stocks to well exceed 2 million tonnes at the end of the campaign. All of this contributed to the pressure on domestic prices which decreased to around $450/ton.
2019
As a result of the unfortunate weather conditions, the 2019 sugar campaign produced slight less than the prior year for a total of 17.4 tonnes. Thus, the European exports had fallen by around 50% YOY in order to prioritize the domestic demand, bringing the European sugar price to around $500/ton. On the consumption side, there was an overall increase from the raising global population and in the EU the trend was decreasing due to the spread of health policies such as the sugar tax involving the soft drinks industry.
2018
During 2018 the weather conditions had been radically different from the ideal ones recorded in 2017. In detail: the delays in the sowing phase caused by the abundant spring rains and the following drought in the summer months, led the European beet industry into a downward spiral. As a consequence, the total sugar output was just over 18 million tonnes, about 3 million less than the prior campaign.
Domestic prices, which collapsed to historic lows following the activation of the quota-free production, reversed their trend by recording increases in Europe, bringing the market price above the $400/ton threshold.
2017
2017 was a year in which the initial yield’s predictions turned out to be significantly inaccurate.
Towards the end of 2016, the European Commission, in fact, had estimated that the total sugar stocks would have been below 1 million tonnes, the lowest level in the last 10 years.
But, what initially seemed to be a situation of supply shortage, turned out to be the exact opposite. Brussels, in actual fact, corrected what was previously stated during the first quarter of 2017, declaring that the market was substantially under control and without any shortages. As a result, the stocks at the end of the campaign well exceeded 2 million tonnes, bringing the market price below the $350/ton threshold.
In light of this, and with the starting date of the quota-free production approaching, during 2017 prices began a rapid decline. This was also influenced by the drastic drop on the international markets, causing the market price to be incapable to cover the production and refining costs. Furthermore, sugar consumption in Europe decreased by almost four percent due to anti-sugar policies promoted by central governments.